Join us as we explain what exactly an international expansion is, and as we explore the benefits of globally expanding your brand. We’ll also share what aspects you need to consider when creating a strategy that could help your business to achieve success in a new market.
What is an international expansion?
An international expansion is when your business establishes itself in another country as part of a long term plan. This could be simply selling a product online to various countries, or having a more physical presence with a property and workforce in a new country.
Why businesses operate internationally
Going global has the opportunity to completely change the future of your business. When done thoughtfully by considering all aspects, you could see your business achieve a new level of success that may not have been previously imaginable.
1. Market strengths
The unpredictability and fluctuation of a market can hugely affect your business and how much it earns. Many businesses with international operations can offset the negative market in one country by successfully operating in another.
2. Staying ahead of competitors
For many businesses, the choice to go international lies purely with gaining a competitive edge over their rivals. For example, if your business entered a new market where your competitor doesn’t yet operate, your business could benefit from a first-mover advantage; this could allow you to build stronger brand awareness before your competitor joins the market.
3. International business doesn’t have to be high risk
The internet can present companies with the opportunity to conduct business globally, without needing a physical presence in the country they would like to trade in. If you run an e-commerce business – selling products through international sites such as Amazon and eBay can give you a good indication of how well your product is perceived and the market’s demand for it.
4. Potential to save on supplier costs
Expanding your business globally will usually widen your customer base, which could mean a higher number of sales. Before expanding your business, it’s always worth asking your suppliers if they would offer discount if you were to increase your orders, therefore reducing overall costs and increasing your profit margins.
5. You already dominate your market
If you already dominate your current market and you’re not looking to offer a new product or service, a global expansion could be the perfect way of growing your business in a country that could be in demand for your offering.
What to consider when expanding a business internationally
There are many approaches and levels of commitment to think about when it comes to taking your business global. Therefore, your international expansion strategy should be tailored to your business and what it sets out to achieve. You should always consider the below when creating your strategy.
- Study the market – check to ensure there is enough demand for your product or service in that country. It’s also crucial to look at the level of competition and how you can set yourself apart from them in order to share or dominate part of the market.
- Business continuity plan – depending on your level of investment and presence in the country you wish to enter, your business could face new risks or threats. It’s always worth looking at how this could change your business continuity plan and what would need to be enforced in order for it to remain relevant to your expanding business.
- Look at possible legal and tax issues – adequate research into the laws and tax obstacles that you could be faced with at any time is really important. Without proper research you could be breaking the law or not paying tax without realising.
- Insurance – your insurance may change if your product or employees go overseas, so it’s always worth checking this with your insurer before a global expansion to ensure your business is completely covered.
- Exchange rate and currency – fluctuating rates and currencies can hugely affect how much money your business ends up with. For that reason, it’s always best to consider the worst case scenarios so you are able to plan how it can be managed and controlled to limit any risk to your business.
- Language barriers – if you’re hoping to expand your business into a country with a different language, it’s worth considering the possible language or cultural barriers that could affect the production of your products or delivery of your service. It’s also important to look at the cost of featuring alternative language options on your website.
- Marketing – if you’re wanting your new market to know about your business, you’ll need to implement and invest in a marketing strategy that can help achieve this.
- A reliable work force – unfortunately for many business owners, doing everything and being everywhere at once is impossible. If you’re looking to have a more physical presence in a new market, it’s crucial that you have a solid and reliable work force or team to ensure a smoother expansion is achieved.
Please ensure you are eligible
You must be a sole trader or Director of a UK Limited company, actively trading for at least 18 months, and registered with Companies House for 18 months (limited companies only), with an annual turnover of £15,000. The minimum age for applying is 18 years old, and you need to be a UK resident.
If you’re considering taking your business international and want to secure a business loan to achieve this, get an instant quote with now. Here at Esme, we offer unsecured business loans from £10,000\* to £150,000 that can be repaid over a 1 to 5 year period, meaning you choose a repayment plan that suits your business.
*From £25,500 for Sole Traders